It looks like Przedsiebiorstwo Hydrauliki Silowej HYDROTOR S.A. (WSE:HDR) is about to go ex-dividend in the next three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Przedsiebiorstwo Hydrauliki Silowej HYDROTOR investors that purchase the stock on or after the 24th of August will not receive the dividend, which will be paid on the 8th of September.
The company's next dividend payment will be zł2.00 per share, on the back of last year when the company paid a total of zł2.00 to shareholders. Looking at the last 12 months of distributions, Przedsiebiorstwo Hydrauliki Silowej HYDROTOR has a trailing yield of approximately 5.2% on its current stock price of PLN38.8. If you buy this business for its dividend, you should have an idea of whether Przedsiebiorstwo Hydrauliki Silowej HYDROTOR's dividend is reliable and sustainable. As a result, readers should always check whether Przedsiebiorstwo Hydrauliki Silowej HYDROTOR has been able to grow its dividends, or if the dividend might be cut.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Przedsiebiorstwo Hydrauliki Silowej HYDROTOR is paying out an acceptable 65% of its profit, a common payout level among most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. What's good is that dividends were well covered by free cash flow, with the company paying out 23% of its cash flow last year.
It's positive to see that Przedsiebiorstwo Hydrauliki Silowej HYDROTOR's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're not enthused to see that Przedsiebiorstwo Hydrauliki Silowej HYDROTOR's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Przedsiebiorstwo Hydrauliki Silowej HYDROTOR has delivered 4.8% dividend growth per year on average over the past 10 years.
The Bottom Line
Is Przedsiebiorstwo Hydrauliki Silowej HYDROTOR an attractive dividend stock, or better left on the shelf? We're not enthused by the flat earnings per share, although at least the company's payout ratio is within reasonable bounds. Additionally, it paid out a lower percentage of its free cash flow, so at least it generated more cash than it spent on dividends. In summary, while it has some positive characteristics, we're not inclined to race out and buy Przedsiebiorstwo Hydrauliki Silowej HYDROTOR today.
If you're not too concerned about Przedsiebiorstwo Hydrauliki Silowej HYDROTOR's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. To that end, you should learn about the 3 warning signs we've spotted with Przedsiebiorstwo Hydrauliki Silowej HYDROTOR (including 1 which is concerning).
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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